I have run into a few issues on Google Compute Engine, it looks like every time the instance gets a DHCP offer the hostname of the machine will get reset to the internal hostname, overriding whatever setting you may have set… this is bad news for a server that needs to respond to DNS settings.

After a few hours of digging and testing out different approaches, including trying to setup a DHCP hook to run the “hostname” linux command I came across documentation from Google talking about “custom metadata”.